Banks forced to buy Hunting shares after placing falls short

Two banks, Barclays Capital and RBS Hoare Govett, were forced to scoop up 2.3m
shares each in Hunting, after they failed to find enough institutional
investors to take up a placing funding a $775m (£473m) acquisition.

Hunting's earnings will be boosted by around 30pc by the deal in the first year following the acquisition.Photo: Reuters

The underwriters had been trying to place 13m shares, but only managed to find takers for 8.4m at 648p each on another volatile day for the market.

Hunting is buying US shale oil and gas drilling equipment maker Titan Group but needed to raise £84.5m in funding to help pay for the purchase.

It will use the cash raised from the placing and a $375m loan from a consortium of banks to complete the acquisition of the Texas-based company.

However, Hunting shares fell 10pc to 646½p, suffering more than other oil and gas companies as a global rout took hold in sectors exposed to commodities.

Titan makes perforating gun systems for fracturing shale rock and other equipment used in drilling. Hunting wants to start selling these products outside its core markets of the US and Canada, having recently opened an office in China.

Peter Rose, finance director, said that despite the "jittery markets" it was a "fantastic acquisition".

"It slots into our structure very well," he said, adding that Titan's margins are much higher than the group average.

Dennis Proctor, chief executive of Hunting, said his company's "geographic profile and financial and operational strength" would create new opportunities for Titan.

Hunting's earnings will be boosted by around 30pc by the deal in the first year following the acquisition.

The oil services company is expected later this month to reveal revenue of around £250m and profits of about £35m for the first six months of the year. It anticipates that it will pay an interim dividend of 4p per share.

Meanwhile, other oil services groups, energy companies and miners once again fell dramatically, as shares beloved of small private investors were hit by a sell-off.

Afren and Gulf Keystone Petroleum were hit once again, closing down 11pc and 9pc respectively after Thursday's sharp losses.

However, the Falklands explorers all pared some of Thursday's dramatic double-digit declines in their share prices. Many investors have been hit by margin calls and stop losses, which trigger sell-offs when a share price falls to a certain low.